Banks urge NY court to throw out buyout case

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The banks are being sued by private-equity groups Thomas H Lee (THL) and Bain Capital, which say they pulled the plug on lending agreements for the deal.

But the banks argue that they had not yet agreed a number of financing issues and were still prepared to negotiate when the firms took legal action.

THL and Bain have filed complaints in New York and Texas against RBS, Citigroup, Morgan Stanley, Credit Suisse, Deutsche Bank and Wachovia to force them to fund the Clear Channel buyout.

The private-equity firms are seeking "specific performance" of a commitment letter that details plans to fund the deal.

However, the banks say that under New York law, specific performance may not be ordered on a contract to lend money.

A spokesman for the banks said they continued to believe the lawsuits were without merit and should be dismissed.

They say they had no intention to harm Clear Channel or the buyout firms, but were simply pursuing legitimate business interests in negotiating terms.